Common Writing Problems in Appraisal Reports

Instructor: Traci Cull
Writing a clear and persuasive appraisal report is imperative in the real estate industry. This lesson will cover common mistakes in reports and how to avoid them.

Appraisal Report Guidelines

A real estate appraisal is a very important document used to determine the market value for a home. The appraiser inspects the home both inside and out and makes detailed notes in order to compare it to other similar properties and determine its value.

Jerry, an appraiser, notices that his recent real estate appraisal has been returned by the lender for review. Jerry is not happy and is not quite sure why his appraisal has been returned. Let's look at the issues.

General Terms in an Appraisal

The first thing that Jerry noticed was that several of his descriptive words were marked with questions. He was stumped, but then realized that he had used very general and relative terms in his appraisal like 'good, bad, high, low', and that those were marked.

He realized that he must fully explain those descriptions and not use a general term such as those. If he was not using those words in direct comparison to a starting point, then they are not very clear.

To say this property was in a high traffic area might be seen as a negative. What is Jerry comparing that to? Is it high traffic compared to a rural road? To a neighboring town? This needs to be clarified.

He then uses the phrase 'moderate traffic in comparison to neighboring areas' instead. This helps clarify his generalization.

He had also used some industry abbreviations such as 'comp' instead of using the full term of 'comparable property'. While most people reading an appraisal report understand the word 'comp', it is always best to use the full term.

Opinions in Appraisals

The next thing Jerry notices is that a few of his 'opinions' were marked. It is important to note that the appraisal must be objective and not contain any subjective words or opinions.

He had written that the sump pump needs replacing but did not back it up with any evidence of age, condition, etc. This would be considered an opinion without information to back it up. He can go back now and add in facts as to the age and condition of the sump pump, so it is clear why it needs to be replaced.

Appraisers write so many appraisals it is often difficult to keep opinions out of their reports. Their knowledge is commonplace and gets interjected into their writing. Jerry must remind himself to back up all his statements with facts.

Jargon and Boilerplate Language

Jerry then saw that a longer technical paragraph he had written was marked with some question marks. Upon further investigation saw that the underwriter had noted that this paragraph was tedious and jargon-heavy.

Being concise in writing an appraisal is key. He had written a long paragraph about the basement leaking and included very technical terms and comparisons. He realized that by rewriting the paragraph into two more concise paragraphs made more sense and was easier to understand. Including technical jargon in the appraisal is okay, but sometimes needs to be condensed.

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